Thinking of going off grid? Understand the impact it will have on your insurance

Homeowners need to consider how their insurance policies will be impacted if they install solar power systems at their homes. File Picture: Henk Kruger / Independent Newspapers

Homeowners need to consider how their insurance policies will be impacted if they install solar power systems at their homes. File Picture: Henk Kruger / Independent Newspapers

Published Feb 14, 2024


Due to the issue of load shedding, more and more consumers are installing solar panels in their homes which has become an attractive option for homeowners, following government’s introduction of a solar panel tax incentive.

While you ponder the idea of installing solar panels in your home, it is vital that you speak to your insurance provider before and after you make a final decision.

Lizo Mnguni, spokesperson for Old Mutual Insure said that a mistake that people make in regard to the installation of solar power systems, is that they are not insured at their correct value.

According to Mnguni, when people don’t insure their solar power systems at the correct value, they will experience a loss, because they would not be able to replace the insured item at its new replacement value.

Another critical mistake that people make, according to Marius Steyn, Personal Lines Underwriting Manager at Santam, it that they misunderstand the risks that comes with installing solar power systems before taking that leap.

Homeowner’s building insurance cover

Andrea Tucker, Director at MortgageMe, said that when considering alternative power sources like solar panels or generators, it’s essential to understand how these items are covered under insurance policies.

“Fixed devices like solar panels are typically covered under homeowners' building insurance. But it’s up to the homeowner to inform their insurer to adjust the total sum insured, accordingly,” Tucker said.

Steyn said when a solar power system is installed, it influences the value of the building, therefore, the building sum insured should be increased to include the value of your investment in the solar power system.

“If the insured value of the building is not equal to the current replacement value, under-insurance (principle of average) could be applicable in the event of a claim and the claim will not be paid in full,” Steyn said.

Mnguni said that homeowners need to remember that they can only claim if their solar panel suffers damage from a sudden and unforeseen event, while claims for wear and tear will be rejected as maintenance is their responsibility.

Hire a reputable installer

It is important that people do their due diligence and hire reputable installers to avoid risks such as fire and explosion brought on by sub-standard or non-compliant installations.

Steyn warns that insurance providers generally do not cover damages resulting from implementation flaws or poor workmanship.

Damage done during the installation process are generally excluded under the buildings section of an insurance policy.

How to i

Ensure that the installer has references of previous work and can provide you with information about how long the business has been in operation.

A reputable installer should provide a comprehensive quote detailing:

– the scope of work

– components that will be used in the installation

– after-sales services

– warranties and guarantees.

They should also make you aware of potential issues that may compromise the installation and functioning of the solar power system before the installation.

Damage during the installation process should be covered by the installer under their Contractors All Risk Insurance policy.

Mnguni said that people who are installing your solar power system must issue a Certificate of Compliance.

This certificate is required by law and for the registration of the solar power generating system with the relevant municipality.

IOL Business